Bovine leukemia virus (BLV) and the human T-cell leukemia viruses (HTLV-I and HTLV-II) are lymphotropic retroviruses that have evolved similar strategies for regulating their expression. These viruses exhibit a highly restricted pattern of gene expression in vivo and in vitro that results from an interaction of cis-acting elements in the proviral long terminal repeats (LTRs) and trans-acting factors. Unlike other RNA tumor viruses, HTLV and BLV possess genes coding for nonstructural proteins that are likely to play a role in gene expression. To characterize the components of the system that interact to regulate virus expression, cis-trans experiments were performed. The LTRs from BLV, HTLV-I, and HTLV-II, as well as from the lentivirus equine infectious anemia virus, were coupled to a variety of bacterial or mammalian "reporter" genes including chloramphenicol acetyltransferase, aminoglycoside phosphotransferase (Neo), or rabbit beta-globin. The expression of these genes following transfection into mammalian cells was analyzed by enzymatic assays, RNA blot hybridization or quantitation of drug-resistant cell colonies. These experiments revealed that each of these LTR was active only in cell lines producing the respective virus, i.e., the BLV LTR was active only in BLV-infected cells. To determine whether the viruses encode the factors that act in trans to regulate transcription, plasmids were constructed to express the BLV X-region genes. These pX expression plasmids were tested by cotransfection with the "reporter" plasmids into uninfected mammalian cells. It was found that BLV encodes a protein of 38 Kd (p38) that functions in trans to activate BLV transcription. These viruses produce a second protein encoded by a different reading frame within the X- region. The function of this protein (p18 in BLV) was examined in complementation experiments which revealed that p18 acts in trans to regulate virus expression by modulating viral mRNA processing events.